Public-Private Partnerships And Their Potential For Rail

After the Honolulu Authority for Rapid Transportation (HART) agency revised its budget to $7.967 billion for the 20-mile Honolulu rail project, among the six options HART presented in May utilizing $1.14 billion less (the “gap”), Option 4 is the only option not about the rail route.

Here’s how a PPP has worked elsewhere in a similar circumstance. A California transit agency leased a rail station site to a developer, who built 135 condominium units (20 percent were “affordable”), plus 20,000 square feet of retail space. The private partner gave the agency a percentage of the project revenues, which paid rail station costs.

Public-private partnerships around Honolulu rail stops like those depicted in this rendering could hold numerous benefits for Oahu.

Currently, Honolulu rail will be a way to travel west-east that eliminates cars mired in freeway traffic. Option 4 would add to that by making rail stations revenue sites that pay for rail costs if private partners see an acceptable return-on-investment.

Incorporating such partnerships, the new formula for rail would look like this: HART + private partner = rail station development = community benefits + local jobs + private partner ROI + $$$, to pay for rail.

However, developers do not project the same ROI for all 21 rail stations, since in real estate development, the time-worn mantra is always “location, location, location.”

For example, the Kakaako rail station for mixed-use development has higher potential ROI than west-side stations, as condominium market prices and commercial rent are vastly different. A more striking example is a rail rider who exits the future Waikiki station to enter boutiques, duty-free shops and restaurants, and an elevator whisks the rider to a condo-hotel. A developer’s bid for such a partnership would include a “Waikiki premium.”

How can HART balance neighborhood benefits and new jobs with private partner ROI targets to make these win-win opportunities for all involved?

Under public-private partnerships, the 21 rail stations could be imagined as micro-destinations — to live, work, shop, eat or be inspired by the arts and music.

Like Disneyland’s various sub-parks, HART must envision each rail station as what we might call a “happening place,” with a theme developed with surrounding neighborhood stakeholders and a potential developer. Under public-private partnerships, the 21 rail stations could be imagined as micro-destinations — to live, work, shop, eat or be inspired by the arts and music.

HART must educate neighborhood residents on what is possible for a mixed-use project at a rail station, but that education must be rooted in reality. That is, residents must accept that developers require a ROI target, so there is community flexibility and compromise regarding expectations.

Starbucks, parking, day-care, and affordable housing might be expected themes. The following are my own out-of-the-box themes:

Music and Dance. Embed a concert hall at a rail station, plus rehearsal and recording space, for musicians and kumu hula. In many European cities, weekday after-work concerts via public transit are the norm. The concert goers will patronize restaurants and shops, which leads to hiring local people.

Food Court. Work with local businesses to launch an Asian food market at the Chinatown rail station, with stalls for roast duck, manapua, and pho: a local + tourist destination.

Museum Exhibits. Imagine a futuristic robot museum, a World War II “442nd Nisei Soldier” exhibit and a children’s aquarium. Commuter ridership drops during weekends, so rail stations can benefit by becoming attractions that draw weekend visitors.

Sports Arena. Build a professional tennis complex with the entrance leading to the rail platform, so it takes just seconds to find seats.

Teaching Hotel. A hotel atop the Honolulu Airport station can be staffed by tourism students — like Cornell’s on-campus Statler Hotel.

Medical Clinic. Rail riders can visit a physician or dentist without driving.

Education and Training. In Tokyo, language schools or nova proliferate around train stations. “Ed Centers” can offer a wide range of courses in areas like computers, hospitality and nursing. Many people are too tired to commute after-work. Why not attend class at a neighborhood rail station?

Leveraging the opportunities of public-private partnerships, a Honolulu resident could live adjacent to a rail station, commute to a job at another station, explore ethnic cuisines at different stations or attend a concert, living a sort of a rail lifestyle.

Public-private partnerships are also about strategic engagement with corporations.

In the early 2000s, Fortune 100 firm Bellsouth transferred employees from downtown Atlanta to three office centers, all located at new Atlanta light rail stations. Over 13,000 Bellsouth employees became rail riders. Many relocated closer to the stations and rode the rail line for meetings at the three Bellsouth centers, alleviating car traffic, parking scarcity and environmental damage in the Atlanta region.

When the Honolulu 20-mile rail route is completed, the job center locations, like downtown, will not have changed. Hordes of car and rail riders still arrive (and depart) at the same place, at the same time.

By relocating corporate employees into new offices, Bellsouth boosted the Atlanta rail line success. Similarly, leading Hawaii businesses moving staff to offices along west-side rail stations would improve Honolulu traffic and parking, and increases contra-flow riders significantly, so trains have riders headed in both east-west directions. Also, these PPP office centers provide customers for neighborhood eateries and retail outlets.

Hawaii business engagement would contribute tenants and make PPP projects less risky for private partners, since developers want to hit ROI targets, and benefit local communities by providing new jobs. All that could make the Honolulu rail lifestyle bloom.

Just for a moment, imagine:

Leaving your office at a Kakaako tower atop a rail station. You take an elevator directly from your office to the train station entrance. You watch a young couple, residents of a nearby condominium, greet diners at an out-door Italian café, as a train car silently powered by high-tech batteries waits for an elderly couple with laughing grandchildren, who are talking about a visit to the Waikiki rail station exhibit featuring Pacific sea turtles. They’re now going to the Pearlridge rail station for the best halo-halo dessert.

You anticipate meeting friends at the Kalihi rail station Hawaiian slack key concert. Afterward, you disembark the train at the East Kapolei station and pick up your spouse’s aloha shirts at the station dry-cleaner, then drive your car for barely 10 minutes to join your family to watch the late-evening TV news, all along one rail line.

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